Has anyone consolidated their debt with Debtscape? My girlfriend is thinking about consolidating her student loans with it, and I just wanted to make sure it is a reputable company (and they don't screw you over in the long run.)

My brother is a mortgage banker. He is very, very negative on these companies. In general, they take a single payment from you and then make payments to your creditors. They make their money by "negotiating" a lower "settlement amount" with your creditors. This screws up your credit report (at least in the US) beyond belief. The reason is that the debt consolidation company will pay your creditors late and will finally settle with them for a reduced amount. You still have a legal contract with the creditor, so they report late payments and "settled" rather than "paid" and really wreck you. Apparently, he has had many customers who have done this and made their payment to the consolidator faithfully and on time for 3+ years, thinking they had fixed things. Their credit reports turn out to by abysmal and there is nothing he can really do for them. The original creditors continue to report delinquency caused by the consolidator. According to him, it is a *very* bad thing to use these companies. According to the folks in the lending business, a bankruptcy is actually easier to deal with on a credit report (I'm not advocating bankruptcy, just trying to illustrate how awful these debt consolidation things can be).

According to my brother, if a person is really upside down, they should contact their creditors and offer to "settle in full" their account for an amount less than their balance owing. If they explain the alternative is bankruptcy, the creditor will sometimes settle. They usually won't consider this until the account is already quite delinquent or even in collections, however, and at that point a persons credit rating is usually pretty hosed. Much better to sell assets that secure credit (cars, etc, but not the house) and pay the accounts and reduce the "debt ratio" so the debtor can pay off the remaining debt on time.

12 months of on time payments is the first hurdle...

Its not really that these companies do anything "wrong", its just that the debtor ends up with a totally hammered credit score that they didn't realize.

FWIW.

Jim

IMHO, you're better off talking to a local bank that you trust and getting a proper debt consolidation loan through them.

Screw that. Rob a bank. It will solve all of your financial problems.

In fact, you'll get free shelter, free meals, and free cable tv for 25 years to life.

Nice one!